Financing the Knowledge SocietySeed and Venture Capital Financing, the roles of the public and the private sector
Claes de Neergaard
CEO Industrifonden
The commercialisation of R&D – the driving forces
The technology transfer challenge – how does Sweden tackle it?
The regional dimension of venture capital financing
Can EU policy to improve technology transfers2007-2013 benefit from the Swedish experience?
T H E M E S
The commercialisation of R&D – the driving forces
The technology transfer challenge – how does Sweden tackle it?
The regional dimension of venture capital financing
Can EU policy to improve technology transfers2007-2013 benefit from the Swedish experience?
T H E M E S
What do we get out of R&D investments?
Financial Times Nov 8, 2005
0 1 2 3 4 5
Businesssector
Universities& colleges
Governmentorganisations
R&D expenditures in relation to GDP 2003
Per cent of GDPSource: OECD 2005
New ZealandIreland (2001)
NorwayUnited Kingdom
Netherlands (2001)CanadaFrance
BelgiumDenmark (2001)
GermanyUnited States
KoreaJapan
FinlandSweden
Israel
Commercialisation of R&D– EU vs. the US
• Stronger output from US research clusters
• Stronger tax incentives in the US
• Stronger incentives for US universities
• The US capital market is more powerful
• US military spending boosts research
• US one homogenous market.EU still too fragmented
EU does not catch up!
The road map from idea to invoice
Technology transfer
Basic Applied
R&D
Market
Collaboration industry –
research organizations
Licensing
Creation of a
new company
Good ideas can end up in
Knowledge Market
©Jan Edling
The Valleyof Death
“”
The commercialisation of R&D – the driving forces
The technology transfer challenge – how does Sweden tackle it?
The regional dimension of venture capital financing
Can EU policy to improve technology transfers2007-2013 benefit from the Swedish experience?
T H E M E S
Enhancement of Technology Transfer – some Swedish measures
• Increase government funding for R&D
• Focus on cutting edge research in centres of excellence
• Public/private partnership program in sixindustry branches
• Improve the effectiveness of both Tech Transfer Offices in universities and Joint Research Institutes
• Innovationsbron – a dedicated financing vehicle for the commercialisation of research
• Maintain a strong Industrifonden
• A welcoming approach to venture capital
Basic R&D Applied R&D Pre-seed Seed Start-up
Financing in different stages
Expansion
Commercial financingPre-commercial financing
Private sector
Public sector
Conclusions from a joint US-EU report
• The venture markets in US and EU invest too little in early stage start-ups
• Constitutes a “market failure”
• Public sector measures are justified to plug this gap
• Public measures should
– work with markets and not crowd out private investment
– support funds with the necessary track record and economies of scale
Source: Department of Commerce and EU Commission, 2005
Venture capital investments in EU-15 2004
SeedEUR 148
m
Total investments EUR 12,000 million
Start-upEUR 2,200 million
ExpansionEUR 7,900 m
Market
Criteria for an effective innovation system
Idea
Increases flow of high quality business ideas
Provides rigorous screening
Involves business angels
Brings in marketperspective early
Based on centresof excellence
South
WestEast
Stockholm Uppsala
Umeå
Luleå
Seed capital
Three focus areas
Sevenregionalcompanies
Infrastructure - Incubators
Academia – Business co-op.
Invests in high-tech companies in ICT,Life Science and Industrial and Energy Ventures
Direct investments in about 100 companiesCo-owner in 11 regional VC-companiesand Innovationsbron
Independent trust set up by the Swedish government in 1979
Total equity: SEK 3.2 billion Invested capital: SEK 1.6 billion
Regional venture capital companies
Venture capital investments
0.230.21
0.160.15
0.12 0.12 0.11 0.10 0.100.08
0.07 0.060.04 0.04
Sw
eden UK
Spa
in
Den
mar
kH
unga
ryP
ortu
gal
Fran
ce
Nor
way
Eur
ope
Net
herla
nds
Finl
and
Bel
gium
Ger
man
y
Italy
Percent of GDP
EVCA 2005
The commercialisation of R&D – the driving forces
The technology transfer challenge – how does Sweden tackle it?
The regional dimension of venture capital financing
Can EU policy to improve technology transfers2007-2013 benefit from the Swedish experience?
T H E M E S
The regional dimension of venture capital
• Private sector venture funds usually covers Sweden or the Nordic countries from one or several capitals
• There is room for smaller regional venture funds for early stage investments in proximity to companies
• Co-investment funds copied on the model developed in Scotland are helpful additions
• Proximity to companies is an advantage but company selection can be too much influenced by regional/local preferences
• Regional investment funds should not be seen as a tool of regional policy but of innovation policy
The commercialisation of R&D – the driving forces
The technology transfer challenge – how does Sweden tackle it?
The regional dimension of venture capital financing
Can EU policy to improve technology transfers2007-2013 benefit from the Swedish experience?
T H E M E S
Can EU policy to improve technology transfers benefit from the Swedish experience ?
Can EU policy to improve technology transfers benefit from the Swedish experience ?
• Measures to stimulate commercialisation of research must get a high priority
• Create two European incubator support programs;one for Life Science and one for Technology
• Focus on national and European R&D centres of excellence
• Positive attitude to mixing financing from the Commission, European Investment Bank, European Investment Fundand national sources
• Do not go too far in defining “European interest”. Good research benefits all EU-countries